New Trust Reporting

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New Trust Reporting

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New Trust Reporting

We want to bring to your attention changes that may affect you in the coming tax season and throughout 2024:

Reporting by Trusts

Trusts with taxation years ending after December 30, 2023, are now required to file a T3, Trust Income Tax and Information Return. Previously, a T3 was not required if there was no income in the trust.

As a result, most trust arrangements, including those known as “bare trusts, will be required to file , even if there is no tax liability.

The new reporting applies to all trusts with a few exceptions:

  • trusts that have been in existence less than three months
  • certain regulated trusts, such as a lawyer’s general trust account
  • graduated rate trusts
  • disability trusts; and
  • trusts that hold qualifying assets with an aggregate fair market value not exceeding $50,000 throughout the year – qualifying assets include cash, government debt obligations, shares in publicly listed companies and mutual funds.

Qualifying assets do not include shares of privately held companies and, therefore, trusts that hold shares in privately held companies will be required to file a trust return.

Schedule 15

Another major change is that each trust must file Schedule 15, Beneficial ownership information of a trust, with its T3.

All trusts will be required to complete the Schedule even if the trust has previously reported the beneficial ownership information, it will still have to advise the CRA whether or not there has been a change in the information.

This form is used to provide the following information for all trustees, beneficiaries, settlors, and persons able to exert control over the trust:

  • Name
  • Address
  • Date of birth
  • Country of Residence
  • Taxpayer Account Number, such as SIN, Business Number, Trust Account Number

The form also requires information on beneficiaries unable to be listed, for example any beneficiaries that cannot be listed by name (such as unborn children and grandchildren, spouses) because they are unknown at the time of filing the trust return.

If the new trust rules apply to you, please complete the fillable Schedule 15 (https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t3sch15/t3sch15-fill-23e.pdf) and returned it to us at your earliest opportunity. You can download the Schedule 15 Form here.

In addition to the enhanced reporting, there are new penalties for not filing a return, which are the greater of $2,500 or 5% of the fair market value of all properties held by the trust in the year.

The T3 filing deadline is April 2, 2024, as the normal deadline of March 31 falls on the weekend in 2024.

CRA will waive late-filing penalties this year as they realize the difficulty of obtaining and submitting the information unless they feel that the failure to submit the T3 is due to gross negligence.

It is essential that you review how your affairs are arranged in order to determine whether a trust exists.

There are a number of situations that may indicate a trust exists and, therefore, you are obliged to file the T3 and Schedule 15:

  • where family member(s)’ names are added to title of a family member’s home, including adult children who hold title to their aging parents’ homes for the sole purpose of simplifying the eventual transfer of the property.
  • where parents hold title to their adult children’s home because they co-signed their mortgage; and
  • where children have their names added to their elderly parents’ bank or investment accounts to help them with bill-paying and other transactions at their direction.

We urge you to contact us as soon as possible so that we can discuss your situation and whether the new reporting requirements apply to you, and if so, obtain the required information and Trust account number, in order for you to meet the filing deadline.